Core Scientific Files for Bankruptcy Protection, Firm Plans to Continue Mining Bitcoin to Pay Down Debt

On Dec. 21, 2022, one of the largest bitcoin mining operations in the industry, Core Scientific, filed for Chapter 11 bankruptcy protection in the Southern District of Texas. According to the filing, Core Scientific has roughly 1,000 to 5,000 creditors and its estimated assets are worth between $1-10 billion.

Another crypto firm has filed for bankruptcy protection as the crypto winter has caused a myriad of businesses to shudder this year. On Wednesday, Core Scientific (Nasdaq: CORZ), one of the largest bitcoin mining companies, filed for bankruptcy in Texas.

The filing notes that Core Scientific has $1-10 billion in assets, but also $1-10 billion in liabilities as well. Additionally, Core Scientific details that the largest creditor is the financial institution B. Riley, alongside 1,000 to 5,000 other creditors.

Core Scientific joins a long list of crypto firms that have filed for bankruptcy protection this year, and is one of several crypto mining operations that have faltered financially as well. For instance, in late Sept. 2022, Compute North filed for Chapter 11 bankruptcy protection.

Financial issues have struck bitcoin mining operations like Argo Blockchain, Iris Energy, and Greenidge Generation. Greenidge managed to secure a restructuring deal with NYDIG on Dec. 20, but Greenidge’s financials say voluntary bankruptcy is still in the cards.

According to the filing, Core Scientific operated close to 250K machines and roughly 24.4 exahash per second (EH/s) of hashrate. In addition to B. Riley, other Core Scientific creditors include Dalton Utilities, Shell Energy Solutions, U.S. Customs and Border Patrol, Duke Energy, Amazon Web Services Inc., DK Construction Company, and Liveview Technologies.

The company also owns equity interest in subsidiaries like Radar Relay, Starboard Capital, and American Property Acquisition. The Chapter 11 filing was submitted by Core Scientific’s president Todd DuChene.

On Wednesday, a person familiar with the matter told CNBC that Core Scientific still generates positive cash flow and the mining operation will continue mining bitcoin to pay down debts. The source further said that the operation will not liquidate and it plans to negotiate a deal with senior security noteholders, CNBC contributor MacKenzie Sigalos detailed.

What do you think about Core Scientific filing for Chapter 11 bankruptcy protection on Dec. 21? Let us know what you think about this subject in the comments section below.